Markets

Facet Biotech Has $722M That Says It Pays to Stand Up to Bullies

By Trista Morrison

Updated on: March 11, 2010 / 9:51 AM EST / MoneyWatch

Little Facet Biotech (FACT) had to put up with some awfully patronizing statements from Biogen Idec (BIIB) when the big biotech was waging a $438 million hostile takeover attempt last fall. But if anyone's feelings got hurt, Abbott's (ABT) $722 million bid for Facet yesterday probably went a long way toward healing the pain.

It was ironic that things between Facet and Biogen got ugly: the two were partners on two products, and Facet CEO Faheem Hasnain was a former Biogen bigwig. But you wouldn't have known that from some of the comments Biogen president and CEO James Mullen made during the negotiations.

Here's a recap, along with what Facet investors are likely thinking now.

Mullen: Biogen Idec views the acquisition of Facet as desirable but not a "must have."
Facet Investors: On what planet is a package containing a Phase III-ready potential blockbuster multiple sclerosis drug, four clinical-stage cancer drugs, an antibody engineering platform and about $300 million in cash not a must have? Yours apparently, but not Abbott's.

Mullen: We already own a 50% interest in [multiple sclerosis drug] daclizumab...We do not intend to overpay for the rest.
Facet Investors: Considering what Abbott just offered, it doesn't look like you were in any danger of overpaying.

Mullen: If Facet stockholders choose not to accept our offer, they will bear 50% of the risks associated with the development of daclizumab, 100% of the risks associated with Facet's interest in other development stage drugs--
Facet Investors (this actually came from Merriman Curhan Ford analyst Mike King): GASP!! You mean biotech companies LOSE MONEY and shareholders have to TAKE RISK?!?!?

Mullen: If Facet allows our offer to expire without concluding a transaction, we believe the price of Facet stock will decline significantly toward pre-offer levels.
Facet Investors: Actually our stock stayed pretty steady, and now it's up another 67 percent. Guess we've got you to thank for getting the ball rolling.

When I was interviewing Facet CEO Hasnain for my BioWorld article, he mentioned that Abbott was culturally a good fit for Facet and had treated the biotech "very respectfully" throughout the negotiations. Bet that was a nice change.

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Bully photo by Flickr user trix0r, CC.